Investor insight from Velocity Capital

What’s your insight into the fundraising landscape in 2023? 

We’re noticing a lot more resilience from founders which is necessary in such a tough market. Of course, due diligence from investors is more rigorous than ever. We’re also seeing a lot more diversity among businesses and founders as well as a greater focus on solving problems that truly matter.

Investors are also looking for a greater emphasis on true profitability rather than revenue growth, which means keeping your cost baes lean and creating a sustainable business with a clear route to profitability.

Investors are also looking to businesses that have adopted robotics and automation to boost their productivity and plug labour shortages, including AI.

We’re also seeing investors doubling down on diversity, with female-led funds showing increasing prevalence. Similarly, investment in sustainability and social impact businesses will continue to increase.

What advice would you share with founders who are looking to raise investment at the moment?

Have your numbers prepared for a more rigorous due diligence process, with longer lead times and more conversations. This means valuations will be under scrutiny so you should be ready to justify your valuation to investors.

You should be able to demonstrate that you’re solving real pain points and that you’ve listened to your customers to find a product market fit.

While ambition needs to remain, there needs to be a greater sense of frugality and only spending on things that will truly move the needle for the business.

Any tips for founders doing cold outreach?

Be targeted and intentional in who you approach – sending an anonymised blanket email to hundreds of people will never be a success. Find the people who generally invest in your space, comment on a recent blog post or deal that the investor was recently involved in, share an article that you think they might find interesting (based on the companies they have invested in or something that stands out on their LinkedIn page). These are all ways to show that you’ve done your research and are willing to make an effort.

Another bit of advice that seems obvious (but apparently isn’t), is to ensure that grammar and spelling are both correct and succinct. Re-read anything before sending it out. A typo on an approach email doesn’t go down well.

Find out more about Velocity Capital and how to pitch to them or investment here.